( 1 ) THIS is a petition by Uttar Pradesh Financial Corporation (herein REFERRED TO to as the Corporation) under Sections 446 and 537 of Companies Act for leave to sell the properly, which is slated to be constituting security of Uttar Pradesh Financial Corporation. The facts, as stated in the petition, are as under:-

( 2 ) THAT the petitioner Corporation had sanctioned in all five loans, aggregating to an amount of Rs. 30,60,000. 00 to the company in liquidation between November, 1983 and October, 1985. Under the said loans, a sum of Rs. 29,65,040. 00 was actually disbursed to the company in liquidation. It is further alleged that the aforesaid loans were secured, inter alia, by equitable mortgage of land and building situated at B-12, Scctor-VIII, Noida and by hypothecation of plant and machinery. On company in liquidation committing several defaults in repayment of the said loans, the petitioner corporation served a notice on the company in liquidation on or about 9th November, 1987 calling upon it to clear the balance amount outstanding at that time and threatening to take over the possession of the company s unit in exercise of the corporation s powers under Section 29 of the Stale Financial Corporations Act, 1951. Having failed to obtain regularisation of the account of the company in liquidation, the said corporation is stated to have taken possession of the aforesaid unit of the company in liquidation on or about 5th November, 1992. However, soon after the take over of the possession, a petition by some of the creditors of the company for its winding up was presented and was registered as C. P. No. 234 of 1992 whereupon a show cause notice was issued and after certain proceedings, the said petition was admilled and thereafter it was allowed and the company was ordered to be wound up on 14th December, 1994. Following the winding up, the liquidator was directed to take possession of all the assets of the company in liquidation which he did. The liquidator also has put his lock on the door of the aforesaid properly in question at Noida on or about 23rd December, 1994. However, before 23rd December, 1994, it is alleged, that the petitioner corporation had already invited offers for sale of the property in exercise of its powers under Section 29 of the State Financial Corporations Act and had negotiated the sale thereof with one Seva Agrotech Limited for a sum of Rs. 19 lakhs and issued a notice to the company under liquidation, requiring it to file objections against the said sale within 15 days. The State Financial consequently has filed present application seeking leave of this Court to proceed with the sale of the said mortgaged land and building, situated at B-12, Sector-VIII, Noida, Ghaziabad District and also allow it to sell hypothecated plant and machinery in realisation of its dues from the company in liquidation. The grant of such an application was opposed by the liquidator. Though no formal reply was filed on behalf of the liquidator to this application, but parties agreed to proceed with the arguments in the absence of a formal reply and detailed arguments were addressed.

( 3 ) THE main argument advanced by the petitioner corporation was that it is a financial corporation under the State Financial Corporations Act and is a secured creditor standing outside the purview of winding up proceedings. It claimed that by virtue of provisions like Sections 29 and 46 B of the said Act, it had the right under the agreement to lake possession of the properly mortgaged and to sell it by virtue of the powers vested in it under Section 29 of the State Financial Corporations Act and to apply the sale proceeds to the satisfaction of its dues. It is further contended that by virtue of the provisions of Section 46-B of the State Financial Corporations Act, any rules or orders made thereunder would prevail over the provisions of any other Act or law for the time being in force. On behalf of the State Financial Corporati